The Cost to Produce Part a Was $20 Per Unit

question 135

Multiple Choice

The cost to produce Part A was $20 per unit in 2019. During 2020, it has increased to $23 per unit. In 2020, Supplier Company has offered to supply Part A for $18 per unit. For the make-or-buy decision,

• A) incremental revenues are $5 per unit.
• B) incremental costs are $3 per unit.
• C) net relevant costs are $3 per unit.
• D) differential costs are $5 per unit.

---

Definitions:

Introductory Paragraph

An introductory paragraph serves as the first section of a written document, introducing the main idea or purpose and preparing the reader for what follows.

Neutral Buffer

Neutral Buffer denotes a non-committal or impartial statement or element that mitigates or softens the impact of the surrounding content.

Positive Wording

The practice of choosing words that have positive connotations to create an encouraging or optimistic tone.

Direct Opening

A communication approach that starts with the main message or purpose at the very beginning, often used for clarity and efficiency.